HomeMy WebLinkAboutItem 11b - Implementing Measure A to be Administered by the California Department of Tax and Fee Administration
DATE: August 20, 2019
TO: Honorable Mayor and City Council
FROM: Dominic Lazzaretto, City Manager
By: Michael Bruckner, Assistant to the City Manager
SUBJECT: RESOLUTIONS IMPLEMENTING MEASURE A TO BE ADMINISTERED
BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE
ADMINISTRATION
RESOLUTION NO. 7268 AUTHORIZING THE CITY MANAGER TO
EXECUTE AGREEMENTS WITH THE CALIFORNIA DEPARTMENT OF
TAX AND FEE ADMINISTRATION FOR IMPLEMENTATION OF LOCAL
TRANSACTIONS AND USE TAX
Recommendation: Adopt
RESOLUTION NO. 7269 AUTHORIZING THE EXAMINATION OF
TRANSACTIONS (SALES) AND USE TAX RECORDS
Recommendation: Adopt
SUMMARY
On March 5, 2019, the City Council unanimously adopted Resolution No. 7246 to place
Ordinance 2361, subject to voter approval, to impose a Transaction and Use Tax
(“Sales Tax”) of 0.75%, on the June 4, 2019, Special Election ballot. The ballot measure
was passed with 63.65% voter approval. The new tax rate, effective January 1, 2020,
will increase the City’s Sales Tax rate from 9.5% to 10.25%, and is projected to
generate an additional $8.6 million in Sales Tax revenue annually in the General Fund.
Therefore, it is recommended that the City Council adopt Resolutions No. 7268 and
7269 authorizing the City Manager to enter into an agreement with the California
Department of Tax and Fee Administration to implement Measure A and for the
confidential examination of tax records generated therein.
DISCUSSION
The California Department of Tax and Fee Administration (“CDTFA”) administers and
collects sales taxes for all jurisdictions throughout the state. In order to ensure that the
Resolutions Implementing Measure A to be Administered by the CDTFA
August 20, 2019
Page 2 of 3
new Sales Tax that was approved by Measure A is collected and administered, t he
CDTFA requires passage of a Resolution approving two agreements with the State, as
well as authorizing a City official to execute the required agreement. Approval of
Resolution No. 7268 (Attachment “A”) would enable staff to complete the required
process to authorize the CDTFA to begin implementation and collection of the additional
Sales Tax increment beginning January 1, 2020.
Additionally, the State Revenue and Taxation Code requires the City to designate
representatives to be authorized to examine confidential Sales Tax records of the
CDTFA. Resolution No. 7269 (Attachment “B”) authorizes the City Manager and
Administrative Services Director to receive such information, and further allows the City
Manager to designate others to receive the information. Due to the number of
businesses collecting sales/transaction and use taxes statewide, and the complexity of
the California’s point-of-sale regulations, the City contracts with HdL Companies (“HdL”)
to review, analyze, and audit Sales Tax receipts in the City of Arcadia. Resolution No.
7269 would enable HdL to review confidential tax information and continue to provide
audit fieldwork and analysis to ensure revenues are fully accounted for.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental
Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the
environment. Therefore, this matter is exempt under CEQA.
FISCAL IMPACT
The implementation of Measure A as approved by Arcadia voters provides for an
additional 0.75% in the City’s overall Sales Tax rate. Effective January 1, 2020, the
Sales Tax rate will increase from 9.5% to 10.25%, the maximum currently allowed by
State law. The additional revenue generated is approximately $8.6 million annually.
Pursuant to Section 7272 of the California Revenue and Taxation Code, the City must
reimburse the CDTFA up to $175,000 for preparation and administration of the new tax
as well as ongoing costs to administer, collect, and remit tax to the City. These costs
are withheld from tax remittances and no additional budget actions are required.
RECOMMENDATION
It is recommended that the City Council adopt the following resolutions implementing
Measure A to be administered by the California Department of Tax and Fee
Administration.
a. Resolution No. 7268 authorizing the City Manager to execute agreements with
the California Department of Tax and Fee Administration for implementation of a
local Transactions and Use Tax; and
Resolutions Implementing Measure A to be Administered by the CDTFA
August 20, 2019
Page 3 of 3
b. Resolution No. 7269 authorizing the examination of Transactions (Sales) and
Use Tax Records.
Attachment “A” - Resolution No. 7268
Attachment “B” - Resolution No. 7269